Geopolitical tensions between the United States and Venezuela have sent shockwaves through the commodities market, propelling gold prices to a sharp intraday rally. On Monday, 5 January, the precious metal climbed by over ₹2,000, marking a gain of 1.5%, to reach ₹1,38,270 per 10 grams in the domestic spot market. Silver witnessed an even steeper ascent, soaring by 3% to trade at ₹2,43,530 per kilogram.
Why Are Gold and Silver Prices Rallying?
Historically, gold has thrived during periods of global uncertainty, acting as a reliable safe-haven asset. The current spike is directly linked to the escalating conflict between the US and Venezuela. However, this recent jump adds to an already spectacular year-long bull run. Over the past twelve months, gold has skyrocketed by more than 78%, driven by a powerful combination of aggressive central bank purchases, anticipation of US Federal Reserve rate cuts, persistent geopolitical risks, and robust inflows into gold-backed exchange-traded funds (ETFs).
Silver's performance has been nothing short of meteoric, registering gains exceeding 170% in the last year. This surge is primarily attributed to strong industrial demand coinciding with tight supply conditions, amplified by enthusiastic retail investment.
"As geopolitical pressures continue to escalate with volatile markets being more than receptive to the problem, gold as an asset class is again under the spotlight for being an excellent safe-haven asset class," explained Aksha Kamboj, Vice President at India Bullion and Jewellers Association (IBJA). She further noted that the scenario is pushing prices to record highs as both investors and central banks increase their allocations, reaffirming gold's prominence even in turbulent times.
Expert Outlook: Tailwinds for Gold in 2026
Analysts believe several factors are aligning to support a continued upward trajectory for gold in 2026. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, highlighted that the year has begun with major geopolitical developments with profound consequences. He pointed to the potential for further global destabilisation from US actions in Venezuela, the lingering Russia-Ukraine war, unrest in Iran, and even risks concerning Taiwan.
"The huge uncertainty and unpredictability of geopolitics will influence the market, too," Vijayakumar stated. Adding to this bullish sentiment are expectations of further interest rate cuts by the US Federal Reserve. Since gold is a non-yielding asset, it becomes more attractive when interest rates fall. Market participants are currently pricing in two rate cuts this year.
According to Aamir Makda of Choice Broking, while the US-Venezuela conflict acts as a tactical accelerator, the core medium-term thesis for gold remains tied to the Federal Reserve's monetary policy.
Is Now the Right Time to Invest in Gold?
For medium to long-term investors, the consensus among experts appears to be positive, but with a note of caution for the near term. Most advisors suggest buying gold on price corrections, as volatility is expected to persist in response to global cues and dollar movements.
Kaynat Chainwala, AVP of Commodity Research at Kotak Securities, emphasised that rising geopolitical risks are intensifying global competition for resources. This environment is likely to push major economies and BRICS nations to accelerate industrial development while encouraging central banks to keep buying gold to diversify reserves. "Taking measured positions in gold and other hard assets makes sense," she underscored, citing ongoing central bank purchases, de-dollarisation trends, and a drive for self-reliant manufacturing as long-term demand drivers.
However, analysts at ICICI Direct offered a more cautious near-term view. They believe gold is vulnerable to profit-booking after last year's steep rise and that current levels may not be favourable for fresh investments, with a less attractive risk-reward ratio. They warned that any progress in Russia-Ukraine peace talks or a de-escalation in US trade wars could reduce the risk premium built into prices.
Despite this near-term caution, ICICI Direct acknowledged that major fundamental drivers like sticky inflation, high government debt, Fed rate cuts, dollar weakness, and strong ETF demand remain intact, pointing towards further upside in 2026. The brokerage provided specific price benchmarks: they see a floor for gold near $3,500-$3,600 per ounce, with a potential rally towards $4,800-$5,000. On the MCX, support is seen near ₹1,05,000-₹1,12,000 per 10 grams, with an upside target of ₹1,55,000-₹1,60,000.
